Tuesday 12 April 2016 by FIIG Research Company updates

Company updates – BlueScope Steel, Glencore and PMP

BlueScope Steel has received a credit rating upgrade from Moody’s, while Glencore announced sales of a 40% stake in its agricultural business. PMP’s Griffin Press will now be the largest digital book printer in Australasia

BlueScope Steel

BlueScope’s credit rating has been upgraded by Moody’s from Ba3 to Ba2 with a stable outlook. The company’s branded product base and cost cutting initiatives have offset the effects of a weakening macro environment for steel producers.

The Moody’s rating upgrade means the rating is now in line with S&P’s BB rating, which was affirmed by them last November with a stable outlook.

According to Moody’s, the upgrade reflects the strengthening in BlueScope's financial profile which has undergone significant improvement in the last 2-3 years.

More information is available here.External link - opens in a new window

Glencore

Glencore has announced the sale of a 40% stake in its agricultural business for USD2.5bn, and further asset sales are being mooted. We continue to remain confident in the company’s ability to achieve its debt reduction target.

Glencore recently announced that it has entered into a definitive agreement with Canada Pension Plan Investment Board (CPPIB) to sell a 40% equity interest in Glencore Agricultural Products for USD2.5bn payable in cash upon closing, subject to customary working capital closing adjustments. The transaction is expected to close in the second half of 2016, with the proceeds of the sale to be applied to reducing debt. CPPIB is one of the world’s largest pension funds with assets under management of close to USD300bn.

More information is available here.External link - opens in a new window

PMP

PMP’s Griffin Press has entered into a leasing and services arrangement with Hewlett Packard to supply three new state-of-the-art digital presses and associated finishing equipment.

Griffin Press will now be the largest digital book printer in Australasia.

The seven year operational lease and service agreements will cost $3.2m p.a., however PMP state it “is expected to be initially cost neutral as the new lease and consumable costs will be broadly offset by operational cost savings on existing volumes”. Further to this, the group states “operational cost savings of circa $1m p.a. are expected to be realised as further conventional processes are converted to digital”.

More information is available here.External link - opens in a new window